Correlation Between INTERSHOP Communications and Medtronic PLC

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and Medtronic PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining INTERSHOP Communications and Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTERSHOP Communications Aktiengesellschaft and Medtronic PLC, you can compare the effects of market volatilities on INTERSHOP Communications and Medtronic PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in INTERSHOP Communications with a short position of Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and Medtronic PLC.

Diversification Opportunities for INTERSHOP Communications and Medtronic PLC

0.51

Correlation Coefficient

INTERSHOP Communications  Medtronic PLC

Very weak diversification

The 3 months correlation between INTERSHOP and Medtronic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and INTERSHOP Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on INTERSHOP Communications Aktiengesellschaft are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Medtronic PLC go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Medtronic PLC

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 2.22 times more return on investment than Medtronic PLC. However, INTERSHOP Communications is 2.22 times more volatile than Medtronic PLC. It trades about 0.04 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.03 per unit of risk. If you would invest  172.00  in INTERSHOP Communications Aktiengesellschaft on September 4, 2024 and sell it today you would earn a total of  8.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

INTERSHOP Communications Aktie  vs.  Medtronic PLC

INTERSHOP Communications

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medtronic PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Medtronic PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with INTERSHOP Communications and Medtronic PLC

The main advantage of trading using opposite INTERSHOP Communications and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERSHOP Communications position performs unexpectedly, Medtronic PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.

The idea behind INTERSHOP Communications Aktiengesellschaft and Medtronic PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.